KPIs for Legal Departments
Legal departments provide important support services for a company by handling legal issues that range from drafting waiver forms for employees to handling lawsuits from angry customers. Internal legal services should make sure that all documents signed by the company are in accordance with its interests and compliant with the latest legislation.
Developing the right instruments to assess the department’s performance is essential to ensure operational excellence. Performance management is based on assessing the results of Key Performance Indicators (KPIs) and taking improvement actions. According to the Association of Corporate Counsel, performance in legal departments can be evaluated from four perspectives:
- Cost effectiveness – to reflect the quality of financial management;
- Staff productivity – to assess the outputs delivered by legal personnel;
- Process efficiency – to outline how well the processes and procedures are designed;
- Cycle time – to provide insights into the timeliness of delivering legal services.
Cost effectiveness KPIs:
- % Legal spending from revenue
- $ Total cost to resolve (TCR+)
- % Law department budget variance
- $ Cost to resolve matter
- $ Outside legal expense per in-house attorney
Staff productivity KPIs:
- % Cases successfully solved
- # Legal staff per 1000 employees
- # Matters handled by attorney
- # Transactional matters per attorney
- # Legal invoices processed per accounts payable FTE
Process efficiency KPIs:
- # Time devoted to legal matters compared to administrative tasks
- # Hours spent per intellectual property matter by attorneys
- # Time to process legal invoices
- # Time devoted to improve existing practices and procedures
- % Budgeted matters handled within budget
Cycle time KPIs:
- # Legal dispute cycle time
- # Cycle time to litigate each lawsuit internally
- # Time to finalize non-trial matters
- # Time to trial
- # Cycle time for establishing a new knowledge repository
Another important perspective focuses on KPIs that reflect the impact of legal actions, like % Internal customer satisfaction with legal services, # Legal department complaints or $ Cost avoidance generated by successful litigations.
References:
- smartKPIs.com (2014), Legal services KPIs
- Stock, R. (2013), Performance data for Legal Department, CCCA Magazine, Summer 2013
- Earson, D. L., Ogden, J. and Schoff, D. L. (2005), How to measure the effectiveness/ value of Legal Departments, Association of Corporate Counsel
Tags: KPI, KPI in Practice, Legal department
